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Tariff Phase-Outs: Theory and Evidence from GATT and NAFTA

In: The Regionalization of the World Economy

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  • Carsten Kowalczyk
  • Donald R. Davis

Abstract

This paper considers tariff phase-outs in multilateral and preferential agreements. The paper finds that early GATT rounds primarily were over bindings of existing rates and that it was not until the 1962-67 Kennedy Round's 50% reduction in manufactured goods tariffs that time paths of tariff reductions became a substantive part of GATT agreements. Existing empirical work has demonstrated that U.S. industries with high initial tariffs tended to receive long periods for tariff adjustment or tended to be exempted from agreed reductions in both the Kennedy and Tokyo Rounds. This paper demonstrates that high U.S. tariffs and little intra-industry trade are associated with long NAFTA phase-out periods for U.S. imports from Mexico. Mexico's phase-outs are correlated, on the other hand, with those of the United States but not generally with Mexico's tariffs.

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This chapter was published in:

  • Jeffrey A. Frankel, 1998. "The Regionalization of the World Economy," NBER Books, National Bureau of Economic Research, Inc, number fran98-1.
    This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 7825.

    Handle: RePEc:nbr:nberch:7825

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    1. Bond, E.W. & Syropoulos, C., 1993. "Optimality and Stability of Regional Trading Blocs," Papers 5-93-2, Pennsylvania State - Department of Economics.
    2. Paul Krugman, 1989. "Is Bilateralism Bad?," NBER Working Papers 2972, National Bureau of Economic Research, Inc.
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    Cited by:
    1. Antoni Estevadeordal & Caroline Freund & Emanuel Ornelas, 2008. "Does Regionalism Affect Trade Liberalization Towards Non-Members?," CEP Discussion Papers dp0868, Centre for Economic Performance, LSE.
    2. Carsten Kowalczyk & Raymond Riezman, 2009. "Trade Agreements," CESifo Working Paper Series 2660, CESifo Group Munich.
    3. Iacovone, Leonardo, 2012. "The better you are the stronger it makes you: Evidence on the asymmetric impact of liberalization," Journal of Development Economics, Elsevier, vol. 99(2), pages 474-485.
    4. James E. Anderson & Eric van Wincoop, 2001. "Borders, Trade and Welfare," NBER Working Papers 8515, National Bureau of Economic Research, Inc.
    5. Hideo Konishi & Carsten Kowalczyk & Tomas Sjostrom, 2003. "Free Trade, Customs Unions, and Transfers," Boston College Working Papers in Economics 568, Boston College Department of Economics.
    6. Alejandro CastaƱeda, 2003. "Mexican manufacturing markups: procyclical behavior and the impact of trade liberalization," Economia Mexicana NUEVA EPOCA, , vol. 0(2), pages 209-230, July-Dece.
    7. M. Ayhan Kose & Christopher M. Towe & Guy Meredith, 2004. "How Has Nafta Affected the Mexican Economy? Review and Evidence," IMF Working Papers 04/59, International Monetary Fund.
    8. Arvind Panagariya, 2003. "The Regionalism Debate: An Overview," International Trade 0309007, EconWPA.
    9. Michael W. Klein & Scott Schuh & Robert K. Triest, 2002. "Job creation, job destruction, and international competition: job flows and trade: the case of NAFTA," Working Papers 02-8, Federal Reserve Bank of Boston.
    10. Andreas Waldkirch, 2011. "Comparative advantage FDI? A host country perspective," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 147(3), pages 485-505, September.
    11. Robert C. Feenstra, 1997. "U.S. Exports, 1972-1994: With State Exports and Other U.S. Data," NBER Working Papers 5990, National Bureau of Economic Research, Inc.
    12. Caroline Freund, 2004. "Reciprocity in Free Trade Agreements," Working Papers Central Bank of Chile 279, Central Bank of Chile.
    13. Emilio Gutierrez & Kensuke Teshima, 2011. "Import Competition and Environmental Performance: Evidence from Mexican Plant-level and Satellite Imagery Data," Working Papers 1101, Centro de Investigacion Economica, ITAM.

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